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2024 (3) TMI 887 - HC - Income TaxValidity of Reopening of assessment - objective satisfaction of the officer on the basis of tangible materials - petitioner had failed to deduct withholding tax on the assumption that the AAR would issue a favourable ruling - petitioner had filed AAR before the Authority for Advance Ruling (Income tax) seeking a ruling on whether payments received by Fives France would be subject to withholding tax u/s 195. which was declined to be answered - HELD THAT:- As principles laid down in the judgment of Rajiv Agarwal [2016 (3) TMI 972 - DELHI HIGH COURT] are clearly applicable to this case wherein as concluded therein that the assessing officer had ignored the objections of the assessee and failed to apply his mind to the material presented by the assessee. Likewise, in Chhugamal Rajpal [1971 (1) TMI 9 - SUPREME COURT] the Supreme Court concluded that approval under Section 148 should be provided after examining the material on record and not in mechanical fashion. Both on account of the reasons for reopening being based on a grossly erroneous factual foundation and by also taking into account that the petitioner actually withheld and remitted taxes in respect of transactions with Fives France that formed the subject of the application before the AAR, the impugned order under Section 148A(d) of the I-T Act and the notice under Section 148 thereof are vitiated. All that remains is to briefly consider the other ground of challenge. Plea of limitation - By referring to the letter of approval with regard to AYs 2016- 2017 and 2017-2018 petitioner pointed out that such approval was granted by the Chief Commissioner of Income Tax. In clauses (i) and (ii) of Section 151 of the I-T Act, the specified authorities for purposes of issuing notice under Section 148 are prescribed. The rank of the specified authority changes depending on the amount of time which has elapsed from the end of the relevant assessment year. If less than 3 years have elapsed, clause (i) is applicable; otherwise, clause (ii) applies. As regards each Relevant AY, even the first notice under Section 148 was issued in June 2021. Thus, more than 3 years had lapsed. For AYs 2014-2015 and 2015-2016, the approval was granted by the Principal Chief Commissioner of Income Tax, who is a specified authority under clause (ii), but the approval for AYs 2016-2017 and 2017-2018 was granted by the Chief Commissioner of Income Tax, who was not a specified authority under clause (ii) of Section 151 at the relevant time unless there was no Principal Chief Commissioner or Principal Director General. The admitted position is that there was a Principal Chief Commissioner. Therefore, the reassessment proceedings in respect of AY 2016-2017 and 2017-2018 are vitiated on this count too. For reasons adverted to above, the impugned order under Section 148A(d) and the notice under Section 148 are quashed. Decided in favour of assessee.
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